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March 28, 2007

VRB Power Systems VRB-ESS for Sorne Hill "Has a Strong Economic Case"

VRB Power Systems (TSX-V: VRB) announced that the Vanadium Redox Battery Energy Storage System (VRB-ESS™) being sold to Tapbury Management Limited (“Tapbury”), previous post, for Phase II of the Sorne Hill Wind Farm in County Donegal, Ireland (“Sorne Hill”) has been increased in size from a 1.5MW x 8hr system to a 2MW x 6hr system.

The value of this contract to VRB Power has increased from US$6.3 million to approximately US$9.4 million. The agreement remains subject to execution of final contracts between Tapbury and VRB Power.

The re-sizing of this system follows completion of the independent feasibility study, by Grant Thorton, on the implementation of the VRB-ESS at Sorne Hill jointly commissioned by Sustainable Energy Ireland (SEI) and Tapbury. This study validates a number of the key revenue streams that will be generated by the VRB-ESS. It also concludes that the optimum size of the system is 2MW of power with 6 hours of storage and the ability to provide 3MW of pulse power for 10 minute periods every hour in order to deal with short term volatility in wind generation.

“We are delighted with the findings of this study,” stated John Ward, Director of Tapbury. “The report provides technical and economic validation for a number of the key revenue streams that we had previously identified for the planned implementation of the VRB-ESS at Sorne Hill. The increase in the size of the system enables us to maximize these revenue streams and, when combined with additional market based payments, shown in the Grant Thornton report included in the study, provides a strong economic case for this purchase. In particular, the study demonstrates the potential for purchasers of VRB Energy Storage Systems in the Irish market to achieve a very healthy IRR of 17.5% on their investment.”

Thornton concluded that in their opinion, based upon the work they have performed and subject to any variations to key assumptions that might prove necessary, the VRB-ESS investment at Sorne Hill Wind Farm would generate a Project internal rate of return (“IRR”) of 11.7% (pre-tax). However, given an appropriately structured investment which utilizes commercially viable levels of gearing, the VRB-ESS at Sorne Hill Wind Farm would generate an IRR of c.17.5% (post tax) for an equity investor.

“This study demonstrates the economic viability of our systems for wind farms such as Sorne Hill,” stated Tim Hennessy, CEO of VRB Power Systems. “This is largely due toour ability to enable wind powered generation to match many of the characteristics of conventional ‘base load and peaking plant’, thereby allowing wind power to be dispatched in a similar way to conventional generation. The report also highlights the need for storage in Ireland to enable the successful roll-out of wind generation from the current installed base of approx. 800MW up to and beyond the 3,000MW currently contracted or proposed, and to deal with the intermittency and constraint issues already being experienced. It is estimated that at least 700MW of storage may be required across Ireland. This sale will provide us with a “blue-print” to execute on similar opportunities in Ireland and worldwide,” concluded Hennessy.

The VRB Energy Storage System (VRB-ESS) is an electrical energy storage system based on the patented vanadium-based redox regenerative fuel cell that converts chemical energy into electrical energy. Energy is stored chemically in different ionic forms of vanadium in a dilute sulfuric acid electrolyte. The electrolyte is pumped from separate plastic storage tanks into flow cells across a proton exchange membrane (PEM) where one form of electrolyte is electrochemically oxidized and the other is electrochemically reduced. This creates a current that is collected by electrodes and made available to an external circuit. The reaction is reversible allowing the battery to be charged, discharged and recharged.

The study goes into great detail on how the system works and how it is used to mitigate power imbalance, smoothing power output and providing an arbitrage service. A previous post describes VRB flow batteries, the companies that produce them and their use in various applications.

Headquartered in Vancouver, Canada, VRB Power Systems Inc. is an energy storage technology developer which is marketing, selling and manufacturing products utilizing the patented VRB Energy Storage System (“VRB-ESS™”).

The VRB-ESS is well suited for a variety of applications. Enabling the provision of “firm” capacity from intermittent renewable generation such as wind and solar; more cost effective and efficient generation of electricity in remote areas; capital deferral for utilities; and load leveling (peak shaving) applications.

I don't think so. Worldwide Vanadium production is around 100,000 tons/year. It also remains fairly underdeveloped. I know that, for example, the Venezula Boscan oil field is about 1 % Vanadium by weight. Going by the power density of 100-150 W/kg listed in their FAQ this facility would consume ~20 tons of Vanadium if composed of that and nothing else.

One can compute the amount of vanadium needed for the energy stored, and IIRC it was around 20 tons. So that power density figure could not have included the entire mass of the system, electrolyte included. Indeed, this link says the mass of the tanks, with electrolyte, is 600 metric tons.

World production of V in 2006 was 62 kilotons, so it's more like .03% of world production, not .1%.

Adding batteries with their charging and inverting equipment to wind farms will alleviate their voltage and frequency problems, allowing them to be installed at greater distances from conventional power plants, and somewhat reduce grid capacity requirements.

Claims that this makes wind similar to baseload plants are false. Imagine that your city is supplied with electricity by one or more coal fired power plants. Each plant has a coal yard that can hold a maximum 6 hour supply of coal. Sometimes coal trains arrive every hour, sometimes every six hours, and sometimes no coal trains for over a week. This is not reliable baseload power.

The analysis assumes a special 6 hour pricing scheme with only one hour of lead time, tailor made for the wind farm, page 71

If nuclear plants were given the same rules they could install batteries and store cheap energy at night and sell it at peak prices during the day, and blow the windmills off the map, while earning huge windfall profits.

[[Except you forgot to tell them that windmills rarely go Chernobyl on ya.]]

Brian, remember the de Havilland Comet, first passenger jet. Thin skins and square windows made for exploding airplanes. None built in the last 40 years.

There were probably some people who wanted to give up aviation and go back to wind powered sailing ships, but fortunately cooler heads prevailed.

I’m willing to bet nobody will build another power reactor with a positive temperature coefficient of reactivity and no containment building. They never met US standards.

Our primitive 1960’s first generation slide rule designed steroidal submarine power plants have done more good than any other first generation energy technology I know of. We have just scratched the surface of nuclear power’s potential.

My recommendation is to increase R&D for all non fossil energy sources by two orders of magnitude and take what ever works best. Wind power will never be cheap or abundant. By the end of the century energy will be abundant, cheap and safe. Therefore wind and corn ethanol are destined to become dead end branches on the energy tree.

Coal kills over 20,000 per year in the US, perhaps a million worldwide and nobody seems to care enough to take serious action. Windmills and corn ethanol will never replace the worlds coal plants, nuclear power can.

Wind is cheap and reliable. VRB gives plenty of time for coal plant to start up should the wind die for hours. Improving weather prediction is helping here also. We shouldn't waste any more money on atomic fission, when fusion is in the pipeline. Too many unresolved issues with fission.